China Won’t Take Currency Jabs Lying Down

By Mark Gongloff

Getty Images

It must be election season in a shaky economy, because everybody’s mad at China again.

Leading Republican presidential candidate Mitt Romney has vowed that, on his first day in the White House in 2013, he will order the Treasury Department to declare China a currency manipulator and threaten tariffs and such if China doesn’t float its currency.

That sentiment gibes, meanwhile, with a bipartisan Senate bill threatening China in a similar way.

Both of these are unlikely to really happen, and with good reason — Americans are in no way eager or prepared to see the prices of the stuff they buy at Wal-Mart skyrocket.

Nonetheless, there are signs that China is not going to take this kind of talk lying down.

Earlier today China’s yuan — which has been slowly appreciating over the past several months, gaining 7% against the dollar since June 2010 — dropped to the bottom of its trading band against the dollar. This may have been a message from the People’s Bank of China, reports Dow Jones Newswires:

“The PBOC is hinting that the pace of yuan appreciation may slow henceforth, after the U.S. Senate voted to pass the currency bill,” said a Shanghai-based trader at a local bank.

“The (Chinese) authorities’ view is that China has already made sizable efforts to let its currency appreciate, and if that still doesn’t satisfy the U.S., then maybe depreciation will,” she added.

Meanwhile, the Treasury Department today had an abysmal 10-year Treasury auction, in which indirect bidding — a proxy for foreign demand — was the lowest since February 2010.

There’s no way of telling if China purposefully sat out the auction to send a message, particularly on a day when everybody’s running for riskier assets.

But the auction was a reminder, intentional or not, of our symbiotic relationship with China — they buy up our massive debt, we buy their cheaply made goods, everybody’s sort-of happy. This relationship has to change some day, but starting a trade war over it now will lead to immediate chaos.

Comments (5 of 5)

I can see a mad rush here in the US to bash China like there's no tomorrow.Because in another decade or so there won't be any market for that.The elites in the US already know that there's really no tomorrow.Only the pitiful general public is still buying into that because of the media's excellent job of brain-washing.

8:43 pm October 13, 2011

@Mark Gongloff wrote :

But the auction was a reminder, intentional or not, of our symbiotic relationship with China — they buy up our massive debt, we buy their cheaply made goods, everybody’s sort-of happy.
----------------
ha! that gave me a tickle. Good job Mark!

4:37 pm October 12, 2011

Vic wrote :

China is a blessing to US elites. They can blame China for everything and the brainwashed American public will eat it up. It is irrationality that I can't explain. From US history, I can only point to rampant anti-Chinese racism and white superority.

Who here believes increasing Chinese price will bring back jobs? You are an idiots. The jobs will go to another country. What the US trying to do is rob the Chinese of their hard earn wealth by reducing their debt through currency valuation. Chinese have slave away for American to get fat and live high on their horses. Chinese have earn every bit of their sucess and here American believe that some how Chinese owes them something.

American need to look at their society full of fraud, wars, pornography, and moral depravity. There is not a day goes by that there isn't some American media bashing China. I am beginning to wonder that the American media is all made up lies about other countries.

4:25 pm October 12, 2011

John wrote :

Sean: please go ahead alone yourself.

3:54 pm October 12, 2011

Sean wrote :

I would be happy to pay more for products if the playing field were leveled with China and already do pick quality over shotty Chinese products. The question I think is how many others are so willing.

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